U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended: December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-30489
YAAK RIVER RESOURCES, INC.
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(Name of small business issuer in its charter)
Colorado 84-1097796
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(State or other jurisdiction of (I.R.S. Employer Identifica-
incorporation or organization) tion No.)
423 Baybridge Drive, Sugarland, TX 77478
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(Address of principal executive offices, including zip code)
(281) 242-7656
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(Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Common
Stock, par value $0.0001 per share
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. X
The issuer's revenues for its most recent fiscal year were $ 0.
The aggregate market value of the voting stock held by non-affiliates, computed
by reference to the average bid and asked prices of such stock as of December
31, 2004 was approximately $349,668.80.
As of December 31, 2003, 67,308,857 shares of Series A Common Stock, par value
$0.0001 per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Registration Statement 33-28106, as amended, is incorporated into Parts I and IV
of this Report.
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1993 is
incorporated into Part IV of this Report.
Transitional Small Business Disclosure Format: Yes___ No X
PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
Yaak River Resources, Inc. (the "Registrant" or the "Company"), was
incorporated under the laws of the State of Colorado under the name Andraplex
Corporation on June 10, 1988, for the primary purpose of seeking out
acquisitions of properties, businesses, or merger candidates, without limitation
as to the nature of the business operations or geographic area of the
acquisition candidate. From inception through the date of completion of its
initial public offering of securities, the Company's activities were directed
toward the acquisition of operating capital.
The Company completed its initial public offering in 1989. After
completion of the offering, the Company began the process of identification and
evaluation of prospective acquisition candidates and other business
opportunities.
Subsequent Business Plans and Business Operations
From 1993 through 1998, the Company was a development-stage enterprise
that sought to engage in the mining of gold and other precious and base metals.
Toward that objective, the Company acquired a number of mining properties
located in or near the Yaak Mining District in Lincoln County, Montana.
Together with its other activities, the Company sought to obtain financing
for development and operating purposes. Those efforts, however, failed to raise
adequate working capital from outside sources. An insufficiency of capital,
combined with regulatory impediments, prevented commencement of significant
mining operations.
Owing to the perceived impracticability of continuing to pursue the
Company's historical business plan, management determined it to be in the best
interests of the Company and its shareholders that the plan be abandoned, and
that the Company dispose of its mining properties. The sale of the mining
properties was consummated in July of 1999.
In September of 1999, the Company acquired 91 unimproved lots located in
Teller County, Colorado. The lots are zoned for residential development, and
comprise a total of approximately 4.7 acres of land. They are located in the
Pike's Peak region approximately six miles by road from the historic mining town
of Cripple Creek, Colorado, and approximately 40 miles by highway from the
Colorado Springs metropolitan area. The lots shall be referred to in this Report
as the "Company Real Estate."
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The Company acquired the Company Real Estate from Donald J. Smith, who is
the former President and a Director of the Company. In connection with the
purchase, the Company's board of directors deemed the Company Real Estate to
have a total value of $162,000. The purchase price was paid in the form of
approximately 23,000,000 treasury shares of the Company's Series A Common Stock.
In the fourth quarter of the year ended December 31, 2000, management
reached a determination that it would not be feasible for the Company to develop
the Company Real Estate. Upon reaching that determination, management adopted
the new business plan summarized under "Plan of Operations," below
Plan of Operations
Management intends to seek out and pursue a business combination with one
or more existing private business enterprises that might have a desire to take
advantage of the Company's status as a public corporation. Management does not
intend to target any particular industry but, rather, intends to judge any
opportunity on its individual merits.
In addition, management intends either to sell the Company Real Estate
as an undeveloped package or to spin off the Company Real Estate into a private
subsidiary corporation that has yet to be formed.
Competition
The Company is and will remain an insignificant participant among the
firms that engage in mergers with and acquisitions of privately financed
entities. Many established venture-capital and financial concerns have
significantly greater financial and personnel resources and technical expertise
than the Company.
In view of the Company's limited financial resources and limited
management availability, the Company will continue to be at a significant
disadvantage compared to the Company's competitors. See "Risk Factors --
Competition."
Employees
The Company has no full time employees. Its officers devote as much
time as they deem necessary to conduct the Company's business. See "Item 10.
Executive Compensation." See also "Risk Factors -- Dependence upon
Management" and "Risk Factors -- Limited Participation of Management."
Risk Factors
An investment in the securities of the Company involves extreme risks and
the possibility of the loss of a shareholder's entire investment. A prospective
investor should evaluate all information discussed in this Report and the risk
factors discussed below in relation to his financial circumstances before
investing in any securities of the Company.
1. No Currently Relevant Operating History. The Company has no currently
relevant operating history, revenues from operations, or assets other than the
Company Real Estate and cash from private sales of stock. The Company faces all
of the risks of a new business and those risks specifically inherent in the
investigation, acquisition, or involvement in a new business opportunity.
Purchase of any securities of the Company must be regarded as placing funds at a
high risk in a new or "start-up" venture with all of the unforeseen costs,
expenses, problems, and difficulties to which such ventures are subject.
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2. No Assurance of Success or Profitability. There is no assurance that
the Company will acquire a favorable business opportunity. In addition, even if
the Company becomes involved in a business opportunity, there is no assurance
that it will generate revenues or profits, or that the market price of the
Company's Common Stock will be increased thereby.
3. Possible Business - Not Identified and Highly Risky. The Company has
not identified and has no commitments to enter into or acquire a specific
business opportunity and therefore can disclose the risks and hazards of a
business or opportunity that it may enter into in only a general manner, and
cannot disclose the risks and hazards of any specific business or opportunity
that it may enter into. An investor can expect a potential business opportunity
to be quite risky. The Company's acquisition of or participation in a business
opportunity will likely be highly illiquid and could result in a total loss to
the Company and its stockholders if the business or opportunity is unsuccessful.
4. Type of Business Acquired. The type of business to be acquired may be
one that desires to avoid effecting a public offering and the accompanying
expense, delays, and federal and state requirements which purport to protect
investors. Because of the Company's limited capital, it is more likely than not
that any acquisition by the Company will involve other parties whose primary
interest is the acquisition of a publicly traded company. Moreover, any business
opportunity acquired may be currently unprofitable or present other negative
factors.
5. Impracticability of Exhaustive Investigation. The Company's limited
funds and the lack of full-time management will likely make it impracticable to
conduct a complete and exhaustive investigation and analysis of a business
opportunity before the Company commits its capital or other resources thereto.
Management decisions, therefore, will likely be made without detailed
feasibility studies, independent analysis, market surveys, and the like which,
if the Company had more funds available to it, would be desirable. The Company
will be particularly dependent in making decisions upon information provided by
the promoter, owner, sponsor, or others associated with the business opportunity
seeking the Company's participation.
6. Lack of Diversification. Because of the limited financial resources of
the Company, it is unlikely that the Company will be able to diversify its
acquisitions or operations. The Company's probable inability to diversify its
activities into more than one area will subject the Company to economic
fluctuations within a particular business or industry and therefore increase the
risks associated with the Company's operations.
7. Possible Reliance upon Unaudited Financial Statements. The Company
generally will require audited financial statements from companies that the
Company proposes to acquire. No assurance can be given, however, that audited
financials will be available to the Company. In cases where audited financials
are unavailable, the Company will have to rely upon unaudited information
received from target companies' management that has not been verified by outside
auditors. The Company is subject, moreover, to the reporting provisions of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and thus will
be required to furnish certain information about significant acquisitions,
including certified financial statements for any business that the Company shall
acquire. Consequently, acquisition prospects that do not have or are unable to
obtain the required certified statements may not be appropriate for acquisition
so long as the reporting requirements of the Exchange Act are applicable.
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8. Investment Company Regulation. The Company does not intend to become
classified as an "investment company" under the Investment Company Act of 1940
(the "Investment Act"). The Company believes that it will not become subject to
regulation under the Investment Act because (i) the Company will not be engaged
in the business of investing or trading in securities, (ii) any merger or
acquisition undertaken by the Company will result in the Company's obtaining a
majority interest in any such merger or acquisition candidate, and (iii) the
Company intends to discontinue any investment in a prospective merger or
acquisition candidate in which a majority interest cannot be obtained. Should
the Company be required to register as an investment company, it shall incur
significant registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission (the
"Commission") as to the status of the Company under the Investment Act. Any
violation of the Investment Act will subject the Company to materially adverse
consequences. Should the Commission find that the Company is subject to the
Investment Act, and order the Company to register under such Act, the Company
would vigorously resist such finding and order. Irrespective of whether the
Commission or the Company were to prevail in such dispute, however, the Company
would be damaged by the costs and delays involved. Because the Company will not
register under the Investment Act, investors in the Company will not have the
benefit of the various protective provisions imposed on investment companies by
such Act, including requirements for independent directors.
9. Other Regulation. An acquisition made by the Company may be of
a business that is subject to regulation or licensing by federal, state, or
local authorities. Compliance with such regulations and licensing can be
expected to be a time-consuming, expensive process and may limit other
investment opportunities of the Company.
10. Dependence upon Management. The Company will be heavily dependent upon
the skills, talents, and abilities of its management to implement its business
plan. The Company's executive officers and directors may devote as little as two
hours per month to the affairs of the Company, which for a company such as this
that is heavily dependent upon management, may be inadequate for Company
business, and may delay the acquisition of any opportunity considered.
Furthermore, management has little or no significant experience in seeking,
investigating, and acquiring businesses and will depend upon its limited
business knowledge in making decisions regarding the Company's operations. See
"Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act." Because investors will not
be able to evaluate the merits of possible business acquisitions by the Company,
they should critically assess the information concerning the Company's
management.
11. Lack of Continuity in Management. The Company does not have employment
agreements with its management, and there is no assurance that the persons named
herein will manage the Company in the future. In connection with acquisition of
a business opportunity, the current management of the Company probably will
resign and appoint successors. This may occur without the vote or consent of the
shareholders of the Company.
12. Conflicts of Interest. Certain conflicts of interest exist between the
Company and its executive officers and directors. Each of them has other
business interests to which they devote their primary attention, and they may be
expected to continue to do so although management time should be devoted to the
business of the Company. As a result, conflicts of interest may arise that can
be resolved only through their exercise of such judgment as is consistent with
their fiduciary duties to the Company.
13. Indemnification of Officers and Directors. The Company's Articles of
Incorporation provide for the indemnification of its directors, officers,
employees, and agents, under certain circumstances, against attorney's fees and
other expenses incurred by them in any litigation to which they become a party
arising from their association with or activities on behalf of the Company. The
Company may also bear the expenses of such litigation for any of its directors,
officers, employees, or agents, upon such person's promise to repay the Company
therefor if it is ultimately determined that any such person shall not have been
entitled to indemnification. This indemnification policy could result in
substantial expenditures by the Company which it will be unable to recoup.
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14. Director's Liability Limited. The Company's Articles of Incorporation
exclude personal liability of its directors to the Company and its stockholders
for monetary damages for breach of fiduciary duty except in certain specified
circumstances. Accordingly, the Company will have a much more limited right of
action against its directors than otherwise would be the case. This provision
does not affect the liability of any director under federal or applicable state
securities laws.
15. Dependence upon Outside Advisors. To supplement the business
experience of management, the Company may be required to employ accountants,
technical experts, appraisers, attorneys, or other consultants or advisors. The
selection of any such advisors will be made by management without any input from
shareholders. Furthermore, it is anticipated that such persons may be engaged on
an "as needed" basis without a continuing fiduciary or other obligation to the
Company.
16. Need for Additional Financing. The Company's funds will not be
adequate to take advantage of any available business opportunities. Even if the
Company were to obtain sufficient funds to acquire an interest in a business
opportunity, it may not have sufficient capital to exploit the opportunity. The
ultimate success of the Company will depend upon its ability to raise additional
capital. The Company has not investigated the availability, source, or terms
that might govern the acquisition of additional capital and will not do so until
it evaluates its needs for additional financing. When additional capital is
needed, there is no assurance that funds will be available from any source or,
if available, that they can be obtained on terms acceptable to the Company. If
not available, the Company's operations will be limited to those that can be
financed with its modest capital.
17. Leveraged Transactions. There is a possibility that any acquisition of
a business opportunity by the Company may be leveraged, i.e., the Company may
finance the acquisition of the business opportunity by borrowing against the
assets of the business opportunity to be acquired, or against the projected
future revenues or profits of the business opportunity. This could increase the
Company's exposure to larger losses. A business opportunity acquired through a
leveraged transaction is profitable only if it generates enough revenues to
cover the related debt and expenses. Failure to make payments on the debt
incurred to purchase the business opportunity could result in the loss of a
portion or all of the assets acquired. There is no assurance that any business
opportunity acquired through a leveraged transaction will generate sufficient
revenues to cover the related debt and expenses.
18. Competition. The search for potentially profitable business
opportunities is intensely competitive. The Company expects to be at a
disadvantage when competing with many firms that have substantially greater
financial and management resources and capabilities than the Company. These
competitive conditions will exist in any industry in which the Company may
become interested.
19. No Foreseeable Dividends. The Company has not paid dividends on
its Common Stock and does not anticipate paying such dividends in the
foreseeable future.
20. Loss of Control by Present Management and Shareholders. The Company
may consider an acquisition in which the Company would issue as consideration
for the business opportunity to be acquired an amount of the Company's
authorized but unissued Common Stock that would, upon issuance, constitute as
much as 95% of the voting power and equity of the Company. The result of such an
acquisition would be that the acquired company's stockholders and management
would control the Company, and the Company's management could be replaced by
persons unknown at this time. Such a merger could leave investors in the
securities of the Company with a greatly reduced percentage of ownership of the
Company. Management could sell its control block of stock at a premium price to
the acquired company's stockholders, although management has no plans to do so.
21. Dilutive Effects of Issuing Additional Common Stock. The majority of
the Company's authorized but unissued Common Stock remains unissued. The board
of directors of the Company has authority to issue such unissued shares without
the consent or vote of the shareholders of the Company. The issuance of these
shares may further dilute the interests of investors in the securities of the
Company and will reduce their proportionate ownership and voting power in the
Company. See "Series B Common Shares Authorized," below.
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22. Thinly-traded Public Market. There currently is only a thinly traded
or virtually inactive public market for the securities of the Company, and no
assurance can be given that a more active market will develop or that an
investor will be able to liquidate his investment without considerable delay, if
at all. If a more active market should develop, the price may be highly
volatile. Factors such as those discussed in this "Risk Factors" section may
have a significant impact upon the market price of the securities of the
Company. Owing to what may be expected to be the low price of the securities,
many brokerage firms may not be willing to effect transactions in the
securities. Even if an investor finds a broker willing to effect a transaction
in these securities, the combination of brokerage commissions, state transfer
taxes, if any, and any other selling costs may exceed the selling price.
Further, many lending institutions will not permit the use of such securities as
collateral for any loans.
23. Broker-Dealer Sales of Company's Registered Securities. The Company's
registered securities are covered by a Securities and Exchange Commission rule
that imposes additional sales practice requirements on broker-dealers who sell
such securities to persons other than established customers and accredited
investors. For purposes of the rule, the phrase "accredited investors" means, in
general terms, institutions with assets in excess of $5,000,000, or individuals
having a net worth in excess of $1,000,000 or having an annual income that
exceeds $200,000 (or that, when combined with a spouse's income, exceeds
$300,000). For transactions covered by the rule, the broker-dealer must make a
special suitability determination for the purchaser and receive the purchaser's
written agreement to the transaction prior to the sale. Consequently, the rule
may affect the ability of broker- dealers to sell the Company's securities and
also may affect the ability of investors in securities of the Company to sell
their securities in any market that might develop therefor.
24. Preferred Shares Authorized. The Articles of Incorporation of the
Company authorize issuance of a maximum of 50,000,000 nonvoting shares of
Preferred Stock, par value $0.0001 per share. No shares of Preferred Stock have
been issued or are outstanding on the date of this Report, and there is no plan
to issue any in the foreseeable future. Should a series of Preferred Stock be
issued, however, the terms of such series could operate to the significant
disadvantage of the holders of outstanding Series A Common Stock or other
securities of the Company. Such terms could include, among others, preferences
as to dividends and distributions on liquidation.
25. Series B Common Shares Authorized. The Articles of Incorporation of
the Company authorize issuance of a maximum of 250,000,000 nonvoting shares of
Series B Common Stock, par value $0.0001 per share. No shares of Series B Common
Stock have been issued or are outstanding on the date of this Report and there
is no plan to issue any in the foreseeable future. Should Series B Common Stock
be issued, however, such Stock could have a substantial, dilutive effect upon
the interests of the holders of outstanding Series A Common Stock or other
securities of the Company, and would reduce the proportionate ownership of such
holders in the Company.
26. Possible Rule 144 Sales. The majority of the outstanding shares of
Common Stock held by present shareholders are "restricted securities" within the
meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted
shares, these shares may be resold only pursuant to an effective registration
statement or under the requirements of Rule 144 or other applicable exemption
from registration under the Act and as required under applicable state
securities laws. Rule 144 provides in essence that a person who has held
restricted securities for a period of one year may, under certain conditions,
sell every three months, in brokerage transactions, a number of shares that does
not exceed the greater of 1.0% of a company's outstanding common stock or the
average weekly trading volume during the four calendar weeks prior to the sale.
There is no limit on the amount of restricted securities that may be sold by a
nonaffiliate after the restricted securities have been held by the owner for a
period of two years. A sale under Rule 144 or under any other exemption from the
Act, if available, or pursuant to subsequent registrations of shares of Common
Stock of present stockholders, may have a depressive effect upon the price of
the Common Stock in any market that may develop. A total of 32,841,977 shares of
Series A Common Stock (49.5% of the total number of issued and outstanding
shares) held by present shareholders of the Company are available for sale under
Rule 144, all of which will be subject to applicable volume restrictions under
the Rule.
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Special Note Regarding Forward-Looking Statements
Some of the statements under "Description of Business," "Risk Factors,"
"Management's Discussion and Analysis or Plan of Operation," and elsewhere in
this Report and in the Company's periodic filings with the Securities and
Exchange Commission constitute forward-looking statements. These statements
involve known and unknown risks, significant uncertainties and other factors
what may cause actual results, levels of activity, performance or achievements
to be materially different from any future results, levels of activity,
performance or achievements expressed or implied by such forward- looking
statements. Such factors include, among other things, those listed under "Risk
Factors" and elsewhere in this Report.
In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "could," "intends," "expects," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential" or "continue" or
the negative of such terms or other comparable terminology.
The forward-looking statements herein are based on current expectations
that involve a number of risks and uncertainties. Such forward-looking
statements are based on assumptions that the Company will obtain or have access
to adequate financing for each successive phase of its growth, that there will
be no material adverse competitive or technological change in condition of the
Company's business, that the Company's President and other significant employees
will remain employed as such by the Company, and that there will be no material
adverse change in the Company's operations, business or governmental regulation
affecting the Company. The foregoing ssumptions are based on judgments with
respect to, among other things, further economic, competitive and market
conditions, and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the Company's
control.
Although management believes that the expectations reflected in the
forward-looking statements are reasonable, management cannot guarantee future
results, levels of activity, performance or achievements. Moreover, neither
management nor any other persons assumes responsibility for the accuracy and
completeness of such statements.
ITEM 2. DESCRIPTION OF PROPERTY
See "Item 1. Description of Business -- Subsequent Business Plans
and Business Operations"
The Company has been provided office space in the offices of its
President, for which it pays no rent.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any threatened or pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's shareholders during the
fiscal year ended December 31, 2003.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The Company's Series A Common Stock is traded on the over-the-counter
market on the "Electronic Bulletin Board" operated by the National Association
of Securities Dealers, Inc., under the symbol YAAKA. The Company's securities
began trading during the first quarter of the Company's fiscal year 1992. The
reported high and low bid prices for the Company's Common Stock for the previous
two fiscal years are set forth below. The bid prices shown reflect quotations
between dealers, without adjustment for markups, markdowns or commissions, and
may not represent actual transactions in the Company's securities.
Series A Common Stock:
Bid Price
2003 High Low
1st Quarter $.03 $.01
2nd Quarter $.03 $.01
3rd Quarter $.02 $.01
4th Quarter $.015 $.01
2002
1st Quarter $.01 $.01
2nd Quarter $.01 $0
3rd Quarter $.03 $0
4th Quarter $.06 $.01
The Company's securities are classified as "designated securities," which
classification places significant restrictions upon broker-dealers desiring to
make a market in such securities. As a result, it may be difficult for
management to continue to interest market makers in the Company's securities.
These difficulties may continue until such time as the Company is able to meet
the criteria to qualify as a non-designated security, so that market makers may
trade without complying with the stringent requirements applicable to designated
securities.
Holders
At December 28, 2003, the Company had 59 shareholders of record. This does
not include shareholders who hold stock in their accounts at broker/dealers.
Dividends
The Company has never paid a cash dividend on its common stock and does
not expect to pay a cash dividend in the foreseeable future.
Unregistered Sales of Equity Securities: None
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS FOR YEAR ENDED DECEMBER 31, 2003 COMPARED TO DECEMBER 31,
2002
The Company had no revenues or operations in the years 2003 or 2002. The
Company incurred expenses of $12,242 in 2003 compared to $16,350 in 2002. The
largest components of expenses were legal and accounting of $7,506 in 2003 and
$15,307 in 2002. The net loss in 2003 was ($12,242) compared to ($16,350) in
2002. The Company as accumulated ($361,338) in deficit for its history. The
net loss per share was nominal in the years 2003 and 2002. The trend of losses
can be expected to continue until a business with revenues exceeding expenses
can be achieved.
LIQUIDITY AND CAPITAL
The Company had $2,219 in cash at year end 2003 compared to $754 at
December 31, 2002. Such capital is insufficient for operations. There is no
other source of capital except liquidation of real estate held, loans from
shareholders or potential private placements of the Company's common stock.
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NEED FOR ADDITIONAL FINANCING
The Company does not have capital sufficient to meet the Company's cash needs,
including the costs of compliance with the continuing reporting requirements of
the Securities Exchange Act of 1934. The Company will have to seek loans or
equity placements to cover such cash needs. Lack of its existing capital may be
a sufficient impediment to prevent it from accomplishing the goal of carrying
out its business. The Company's needs for additional financing are likely to
increase substantially. The Company will need to raise additional funds to
expand any business activities in the next twelve months.
No commitments to provide additional funds have been made by management or other
stockholders. Accordingly, there can be no assurance that any additional funds
will be available to the Company to allow it to cover its expenses as they may
be incurred.
Irrespective of whether the Company's cash assets prove to be inadequate to meet
the Company's operational needs, the Company might seek to compensate providers
of services by issuances of stock in lieu of cash.
The Company has no plans for any research and development in the next twelve
months. The Company has no plans at this time for purchases or sales of fixed
assets which would occur in the next twelve months.
The Company has no expecation or anticipation of significant changes in the
number of employees in the next twelve months. However, if it achieves a
business acquisition, if may acquire or add employees of an unknown number in
the next twelve months.
The Company's auditor has issued a "going concern" qualification as part of his
opinion in the Audit Report. There is substantial doubt about the ability of the
Company to continue as a "going concern." The Company has no business, no
capital, debt in excess of $14,471, all of which is current, minimal cash,
assets consisting only of real estate which may not be liquid, and no capital
commitments. The effects of such conditions could easily be to cause the
Company's bankruptcy, except there are no assets to liquidate in Bankruptcy.
ITEM 7. FINANCIAL STATEMENTS
Please see pages F-1 through F-7.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 8A. CONTROL AND PROCEDURES
The management of the company has evaluated the effectiveness of the
issuer's disclosure controls and procedures as of a date within 90 days prior to
the filing date of the report (evaluation date) and have concluded that the
disclosure controls and procedures are adequate and effective based upon their
evaluation as of the evaluation date.
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The directors and executive officers of the Company, and their respective
ages, positions held in the Company, and duration as such, are as follows:
Name Age Positions Held and Tenure
---- --- -------------------------
Blaize N. Kaduru 53 President, Secretary and
Treasurer and a Director
since December 18, 2002
Robert Pike 74 Vice President and a Director
since December 21, 1999
Business Experience
Set forth below is a brief account of the education and business experience
during at least the past five years of each of the Company's directors and
executive officers, indicating the principal occupation and employment during
that period, and the name and principal business of the organization in which
such occupation and employment were carried out.
Biographical Information
BLAIZE N. KADURU. Mr. Kaduru is an Adjunct Professor, teaching economics
and business related college courses at Wharton Junior College in Sugarland,
Texas, since January 2003. Previously, he was Executive Vice President of
Business Development for Wireless Communications Technology, Inc., a spin-off
of Prodigy Communications Inc. in Houston, Texas.
ROBERT PIKE. Mr. Pike has been Vice President and a Director of the
Company since December 21, 1999. Mr. Pike is a retired banker. For more than
the past five years, he has been an investor. Also for more than the past five
years, Mr. Pike has been President and sole owner of Bob Pike Associates, Inc.,
a real estate consulting and inspection firm, based in Englewood, Colorado, that
serves financial institutions.
The Company has not appointed an audit committee. The Board of Directors
acts as the Audit Committee.
The Company has not hired a "qualified financial expert" as defined under
the Sabanes-Oxley legislation implemented by the SEC. The Company intends to
hire such expert when its operations justify the expenditure of monies for a
qualified person.
The Company has not adopted a Code of Ethics.
-11-
ITEM 10. EXECUTIVE COMPENSATION
Cash Compensation
During the fiscal year ended December 31, 2003, no executive officer of the
Company received any cash compensation or share compensation or stock options
other than reimbursement of expenses incurred on behalf of the Company.
Compensation Pursuant to Plans
None.
Other Compensation
None.
Compensation of Directors
None.
Termination of Employment and Change of Control Arrangements
None.
LTIP: None
SARS/Options: None
-12-
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
As of December 28, 2002, the persons listed in the table set forth below
were known by the Company to own or control beneficially more than five percent
of its outstanding common stock, par value $0.0001 per share, its only class of
outstanding securities. The table also sets forth the total number of shares of
these securities owned by the officers and directors of the Company as a group.
Name and Address of Number of Shares Percentage
Beneficial Owner Owned Beneficially of Class
Eric Sunsvold 6,694,605 9.9%
423 Baybridge Drive
Sugarland, TX 77478
Donald J. Smith 31,661,977(1) 47.0%
2501 E. Third St.
Casper, WY 82609
Robert Pike 680,000 1.0%
6396 E. Fair Avenue
Englewood, CO 80111
Blaize N. Kaduru 0 0%
423 Baybridge Drive
Sugarland, TX 77478
Darrell Benjamin 4,325,000 6.4%
6658 S. Starlight Rd.
Morrison, CO 80465
All officers and directors 32,341,977 48.0%
as a group (two persons)
(1) The figure shown includes 10,000 shares held in the name of Suvo
Corp. Mr. Smith is the owner of Suvo Corp.
Changes in Control
The Company knows of no arrangement or understanding, the operation of
which may at a subsequent date result in a change of control of the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended December 31, 2003, the Company did not engage
in any related-party transactions.
There were no transactions, or series of transactions, for the fiscal year
ended December 31, 2003, nor are there any currently proposed transactions, or
series of the same, to which the Company is a party, in which the amount
involved exceeds $60,000 and in which to the knowledge of the Company any
director, executive officer, nominee, five-percent shareholder or any member of
the immediate family of the foregoing persons have or will have a direct or
indirect material interest.
-13-
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
Exhibit No. Description Location
3.1 Articles of Incorporation Incorporated by reference
to Exhibit 3.1 to the
Registrant's Registration
Statement on Form S-18,
Registration No. 33-28106,
effective July 21, 1989
3.2 Bylaws Incorporated by reference to
to Exhibit 3.2 to the
Registrant's Registration
Statement on Form S-18,
Registration No. 33-28106,
effective July 21, 1989
3.3 Amendment to Articles of Incorporated by reference
Incorporation to the Company's Annual
Report on Form 10-KSB for
the fiscal year ended
December 31, 1992
4.1 Rights of Stockholders Included in Exhibits 3.1,
3.2, and 3.3, above.
Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of the
Company's fiscal year ended December 31, 2003.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
General. Michael Johnson & Co., LLC, CPAs ("MJC") is the Company's principal
auditing accountant firm. The Company's Board of Directors has considered
whether the provisions of audit services is compatible with maintaining MJC's
independence.
Audit Fees. MJC billed the Company $2,000 for the following
professional services: audit of the annual financial statement of the Company
for the fiscal year ended December 31, 2002. MJC billed the Company $3,000 for
the 2003 audit.
There were no audit related fees in 2002 or 2003. There were no tax
fees or other fees in 2002 or 2003.
The Company's Board acts as the audit committee and had no
"pre-approval policies and procedures" in effect for the auditors' engagement
for the audit year 2002 and 2003.
All audit work was performed by the auditors' full time employees.
-14-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: April 10, 2004 YAAK RIVER RESOURCES, INC.
By: /s/ Blaize N. Kaduru
Blaize N. Kaduru, President
Secretary and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the Registrant
and in the capacities and on the dates indicated.
Name Title Date
/s/ Blaize N. Kaduru President, Secretary, Treasurer, April 10, 2004
Blaize N. Kaduru and a Director
(Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer)
/s/ Robert Pike Vice President and a Director April 10, 2004
Robert Pike
-15-
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
Years Ended December 31, 2003 and 2002
Michael Johnson & Co., LLC.
9175 Kenyon Ave., #100
Denver, CO 80237
Phone: 303-796-0099
Fax: 303-796-0137
To the Board of Directors
Yaak River Resources, Inc.
Casper, Wyoming
We have audited the accompanying balance sheets of Yaak River Resources, Inc. (A
Development Stage Company) as of December 31, 2003 and 2002, and the related
statements of operations, cash flows, and changes in stockholders' equity for
years ended December 31, 2003 and 2002 and for the period June 10, 1988
(inception) to December 31, 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statements
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Yaak River Resources, Inc. at
December 31, 2003 and 2002, and the results of its operations and its cash flows
for the years ended December 31, 2003 and 2002 and for the period June 10, 1988
(inception) to December 31, 2003 in conformity with accounting principles
generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 1 to the
financial statements, the Company is in the development stage, conditions exist
which raise substantial doubt about the Company's ability to continue as a going
concern unless it is able to generate sufficient cash flows to meet its
obligations and sustain its operations. Management's plans in regard to these
matters are described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Michael Johnson & Co., LLC.
Denver, Colorado
March 24, 2004
F-1
Yaak River Resources, Inc.
(A Development Stage Company)
Balance Sheets
December 31,
2003 2002
------------- --------------
ASSETS:
Current Assets:
Cash $ 2,219 $ 754
------------- --------------
Total Current Assets 2,219 754
------------- --------------
Other Assets:
Investment - Properties 35,743 35,743
------------- --------------
Total Other Assets 35,743 35,743
------------- --------------
TOTAL ASSETS $ 37,962 $ 36,497
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts Payable $ 9,971 $ 764
Shareholder Loans 4,500 -
------------- --------------
Total Current Liabilities 14,471 764
------------- --------------
STOCKHOLDERS' EQUITY:
Preferred Stock, par value $.0001 per share,
50,000,000 shares authorized, issued and outstanding - none - -
Series A Common Stock, par value $.0001 per share;
250,000,000 shares, Issued and outstanding -
67,308,857 shares in 2003 and 2002, respectively 6,730 6,730
Series B Common Stock, par value $.0001 per share;
250,000,000 shares authorized, issued and outstanding,
None - -
Capital paid in excess of par value 378,099 378,099
Deficit accumulated during the development stage (361,338) (349,096)
------------- --------------
Total Stockholders' Equity 23,491 35,733
------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 37,962 $ 36,497
============= ==============
The accompanying notes are an integral part of these financial statements.
F-2
Yaak River Resources, Inc.
(A Development Stage Company)
Statements of Operations
June 10, 1988
Year Ended (Inception) to
December 31, December 31,
2003 2002 2003
---------------- --------------- --------------
Revenue $ - $ - $ -
Expenses:
Amortization - - 1,500
Bank Charges 67 16 649
Legal & Accounting 7,506 15,307 113,765
Director Fees - - 800
Office Expense 1,000 - 8,990
Stock Fees & Other Costs 2,355 60 13,303
Administration/Consulting 1,314 967 128,389
Mining Assessments & Fees - - 75,479
Bad Debt - - 6,250
Rent/Telephone - - 12,213
---------------- --------------- --------------
Total Expenses 12,242 16,350 361,338
---------------- --------------- --------------
Net Loss Accumulated During
the Development Stage $ (12,242) $ (16,350) $ (361,338)
================ =============== ==============
Nel Loss per common share
is less than $.002 $ * $ *
================ ===============
Weighted average number of
common shares outstanding 67,308,857 67,308,857
================ ===============
The accompanying notes are an integral part of these financial statements.
F-3
Yaak River Resources, Inc. Continued...
(A Development Stage Company)
Statements of Stockholders' Equity
Deficit
Capital Paid Accum. During
Common In Excess of the Development
# of Shares Stock Par Value Stage Totals
------------ --------- ----------- -------------- ----------
June 10, 1988 (Inception) - $ - $ - $ - $ -
Issuance of common stock:
January 6, 1989 (for services) 10,000,000 1,000 500 - 1,500
January 6, 1989 (for cash) 5,000,000 500 - - 500
November 27, 1989 (Public offering) 2,666,000 266 12,353 - 12,619
Net Loss - - - (3,765) (3,765)
------------ ---------- ----------- -------------- ----------
Balance - December 31, 1989 17,666,000 1,766 12,853 (3,765) 10,854
------------ ---------- ----------- -------------- ----------
Net Loss - - - (10,129) (10,129)
------------ ---------- ----------- -------------- ----------
Balance - December 31, 1990 17,666,000 1,766 12,853 (13,894) 725
------------ ---------- ----------- -------------- ----------
Net Loss - - - (300) (300)
------------ ---------- ----------- -------------- ----------
Balance - December 31, 1991 17,666,000 1,766 12,853 (14,194) 425
------------ ---------- ----------- -------------- ----------
Issuance of common stock:
January 10, 1992 (for assets YRML) 30,000,000 3,000 134,910 - 137,910
Net Loss - - - (47,589) (47,589)
------------ ---------- ----------- -------------- ----------
Balance - December 31, 1992 47,666,000 4,766 147,763 (61,783) 90,746
------------ ---------- ----------- -------------- ----------
Issuance of common stock:
June 30, 1993 (for cash) 6,000,000 600 149,400 - 150,000
June 30, 1993 (for services) 3,000,000 300 - - 300
Net Loss - - - (54,951) (54,951)
------------ ---------- ----------- -------------- ----------
Balance - December 31, 1993 56,666,000 5,666 297,163 (116,734) 186,095
------------ ---------- ----------- -------------- ----------
Net Loss - - - (26,293) (26,293)
------------ ---------- ----------- -------------- ----------
Balance - December 31, 1994 56,666,000 5,666 297,163 (143,027) 159,802
------------ ---------- ----------- -------------- ----------
Net Loss - - - (17,764) (17,764)
------------ ---------- ----------- -------------- ----------
Balance - December 31, 1995 56,666,000 5,666 297,163 (160,791) 142,038
------------ ---------- ----------- -------------- ----------
Net Loss - - 7,500 (19,842) (12,342)
------------ ---------- ----------- -------------- ----------
Balance - December 31, 1996 56,666,000 5,666 304,663 (180,633) 129,696
------------ ---------- ----------- -------------- ----------
Net Loss - - - (24,037) (24,037)
------------ ---------- ----------- -------------- ----------
Balance - December 31, 1997 56,666,000 5,666 304,663 (204,670) 105,659
------------ ---------- ----------- -------------- ----------
Net Loss - - - (78,712) (78,712)
------------ ---------- ----------- -------------- ----------
Balance - December 31, 1998 56,666,000 5,666 304,663 (283,382) 26,947
------------ ---------- ----------- -------------- ----------
Net Loss - - - (15,204) (15,204)
------------ ---------- ----------- -------------- ----------
Balance - December 31, 1999 56,666,000 5,666 304,663 (298,586) 11,743
------------ ---------- ----------- -------------- ----------
The accompanying notes are an integral part of these financial statements.
F-4
Yaak River Resources, Inc. Continued
(A Development Stage Company)
Statements of Stockholders' Equity
Deficit
Capital Paid Accum. During
Common In Excess of the Development
# of Shares Stock Par Value Stage Totals
------------ --------- ----------- -------------- ----------
Issuance of common stock for cash 3,000,000 300 20,700 - 21,000
Issuance of common stock for cash 1,000,000 100 6,900 - 7,000
Issuance of common stock for services 1,000,000 100 6,900 - 7,000
Issuance of common stock for debt 3,142,857 314 21,686 - 22,000
Net Loss for year - - - (24,730) (24,730)
------------ ---------- ----------- -------------- ----------
Balance - December 31, 2000 64,808,857 6,480 360,849 (323,316) 44,013
------------ ---------- ----------- -------------- ----------
Issuance of common stock for cash 1,500,000 150 10,350 - 10,500
Net Loss - - - (16,350) (16,350)
------------ ---------- ----------- -------------- ----------
Balance - December 31, 2001 66,308,857 6,630 371,199 (339,666) 38,163
------------ ---------- ----------- -------------- ----------
Issuance of common stock for cash 1,000,000 100 6,900 - 7,000
Net Loss - - - (9,430) (9,430)
------------ ---------- ----------- -------------- ----------
Balance - December 31, 2002 67,308,857 6,730 378,099 (349,096) 35,733
------------ ---------- ----------- -------------- ----------
Net Loss for year - - - (12,242) (12,242)
------------ ---------- ----------- -------------- ----------
Balance - December 31, 2003 67,308,857 $ 6,730 $ 378,099 $ (361,338) $23,491
============ ========== =========== ============== ==========
The accompanying notes are an integral part of these financial statements.
F-5
Yaak River Resources, Inc.
(A Development Stage Company)
Statements of Cash Flows
June 10, 1988
Year Ended (Inception) to
December 31, December 31,
2003 2002 2003
--------------- -------------- --------------
Cash Flows from Operating Activities:
Net Loss Accumulated During the
Development Stage $ (12,242) $ (9,430) $ (361,338)
Adjustments to reconcile net loss to net cash
used in operating activities
Amortization and Depreciation - - 1,500
Organization Costs - - (1,500)
Stock issued for services - - 8,800
(Decrease) Increase in Accounts Payable 9,207 (565) 9,971
--------------- -------------- --------------
Net Cash Flows Used In Operating Activities (3,035) (9,995) (342,567)
--------------- -------------- --------------
Cash Flows from Investing Activities:
Exchange of properties - net - - 147,167
Investment Purchase - - (305,410)
--------------- -------------- --------------
Net Cash Flow Used In Investing Activities - - (158,243)
--------------- -------------- --------------
Cash Flows from Financing Activities:
Advance from shareholders 4,500 - 4,500
Proceeds from Long-Term Debt - - 189,500
Payment of Long-Term Debt - - (45,000)
Proceeds from Sale of Stock - 7,000 354,029
--------------- -------------- --------------
Net Cash Flows Provided by Financing Activities 4,500 7,000 503,029
--------------- -------------- --------------
Net Increase (Decrease) in Cash 1,465 (2,995) 2,219
Cash at beginning of period 754 3,749 -
--------------- -------------- --------------
Cash at end of period $ 2,219 $ 754 $ 2,219
=============== ============== ==============
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ - $ - $ -
=============== ============== ==============
Cash paid during the period for income taxes $ - $ - $ -
=============== ============== ==============
Noncash Investing and financing activities:
In 1999, the Company exchanged properties with
a book value of $182,910 to a related party in
payment of liabilities of $147,167 and land with
book value of $35,743
In 2000, the Company issued 3,124,857 shares of
of common stock in payment of notes payable
of $22,000.
The accompanying notes are an integral part of these financial statements.
F-6
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2003
Note 1 - General:
-------
The Company:
On June 10, 1988, Yaak River Resources, Inc. (the Company) was
incorporated under the laws of Colorado under the name of Andraplex
Corporation. The name was changed at the annual shareholder's meeting
on January 10, 1992. The Company's primary purpose is to engage in
selected acquisitions and development of mineral and mining properties.
Going Concern:
The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States,
which contemplates continuation of the Company as a going concern. The
Company's current liabilities exceed current assets by $12,252 and has
suffered recurring losses of $361,338 from operations.
The future success of the Company is likely dependent on its ability to
attain additional capital to develop its proposed products and
ultimately, upon its ability to attain future profitable operations.
There can be no assurance that the Company will be successful in
obtaining such financing, or that it will attain positive cash flow from
operations.
Note 2 - Summary of Significant Accounting Policies:
------------------------------------------
Development Stage Company
The Company has not earned significant revenue from planned principal
operations. Accordingly, the Company's activities have been accounted
for as those of a "Development Stage Enterprise" as set forth in
Financial Accounting Standards Board Statement No. 7 ("SFAS 7"). Among
the disclosures required by SFAS 7 are that the Company's financial
statements be identified as those of a development stage company, and
that the statements of operation, stockholders' equity (deficit) and
cash flows disclose activity since the date of the Company's inception.
Basis of Accounting:
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with accounting principles generally
accepted in the United States.
Cash and Cash Equivalents:
For purposes of the statement of cash flows, the Corporation considers
all cash and other highly liquid investments with initial maturities of
three months or less to be cash equivalents.
Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
F-7
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2003
Note 2 - Summary of Significant Accounting Policies: (Continued)
-------------------------------------------------------
Income Taxes
The Company accounts for income taxes under SFAS No. 109, which
requires the asset and liability approach to accounting for income
taxes. Under this method, deferred tax assets and liabilities are
measured based on differences between financial reporting and tax bases
of assets and liabilities measured using enacted tax rates and laws
that are expected to be in effect when differences are expected to
reverse.
Net (Loss) Per Common Share:
The net (loss) per common share of the Series A Common Stock is
computed based on the weighted average number of shares outstanding.
Other Comprehensive Income
The Company has no material components of other comprehensive income
(loss) and accordingly, net loss is equal to comprehensive loss in all
periods.
Note 3 - Purchase of Properties:
----------------------
On January 10, 1992, at the Annual Meeting of Shareholders, the
shareholders voted unanimously to purchase certain mineral and mining
properties (the Properties) located in the State of Montana, including
leases, drawings, engineering studies and other tangible and intangible
assets associated with the Properties. The seller of the Properties was
Yaak River Mines, Ltd. They received 30,000,000 shares of Series A
Common Stock. The issuance of the 30,000,000 shares of Series A Common
Stock was exempt from registration under the exemption provided in
Section 4(2) of the Securities Act of 1933, as amended.
The Company is the beneficiary of 16,000,000 of the above shares, which
are being held in the Con Tolman Memorial Trust C. 8,000,000 additional
shares of the Company were placed in the trust as part of the original
purchase of the Company.
On November 20, 1999, the Company voted to close the Con Tolman
Memorial Trust and exchange of 23,168,000 shares for 92 building lots
in Victor, Colorado. The remaining 832,000 shares were transferred to
Yaak River Resources, Nevada in lieu of payment of shareholder loans.
Note 4 - Capital Stock Transactions
--------------------------
Initial Public Offering:
In the Company's initial public offering, which was closed on November
27, 1989, the Company sold 2,580,000 units (the Units). 86,000
additional shares were issued to the underwriters. Each Unit consisted
of one (1) share of Series A Common Stock, one (1) A Warrant
exercisable at $.05, one (1) B Warrant exercisable at $.10. Costs,
consisting of $9,444 and 86,000 shares of Series A Common Stock,
incurred to complete the registration were offset against the gross
proceeds.
F-8
YAAK RIVER RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2003
Note 5 - Yaak River Resources Timber Division, Limited Partnership:
----------------------------------------------------------
On August 14, 1992, the Company formed a limited partnership, Yaak
River Resources Timber Division L.P. (the Partnership); a Colorado
limited partnership, with subscriptions for 40 Units at $5,000 per Unit
for an aggregate price of $200,000. Each Unit contains 1/40th interest
in the Partnership and 150,000 shares of Series A Common Stock of the
Company. The Company is the general Partner of the Partnership. As a
part of the formation of the Partnership, the Company agreed to reserve
6,000,000 shares of its Series A Common Stock for the Partnership. Said
6,000,000 shares of Series A Common Stock represents the shares offered
in the Units issued by the Partnership. The Partnership was formed for
the purpose of developing certain available natural resources on
properties under the management of the Company.
On June 30, 1993, the Company sold Six Million (6,000,000) shares of
its $0.0001 par value Series Common Stock for the issuance to the
purchasers of the Limited Partnership interests in the Yaak River
Resources, Timber Division L.P., for $150,000.
On November 20, 1999, the Company voted to terminate the Partnership
and asset interests be distributed prorata.
Note 6 - Income Taxes
------------
There has been no provision for U.S. federal, state, or foreign income
taxes for any period because the Company has incurred losses in all
periods and for all jurisdictions.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of deferred tax assets are as follows:
Deferred tax assets
Net operating loss carryforwards $361,338
Valuation allowance for deferred tax assets (361,338)
--------
Net deferred tax assets $ -
=========
Realization of deferred tax assets is dependent upon future earnings, if
any, the timing and amount of which are uncertain. Accordingly, the net
deferred tax assets have been fully offset by a valuation allowance. As
of December 31, 2003, the Company had net operating loss carryforwards
of approximately $361,338 for federal and state income tax purposes.
These carryforwards, if not utilized to offset taxable income begin to
expire in 2003. Utilization of the net operating loss may be subject to
substantial annual limitation due to the ownership change limitations
provided by the Internal Revenue Code and similar state provisions. The
annual limitation could result in the expiration of the net operating
loss before utilization.
F-9